Charter International generated over 70 per cent of its profits in the first half by selling welding equipment such as electrodes and wires under its global brand, Esab. This is a cyclical and operationally geared business that suffered severely from destocking last year, but is now leading the group out of the recession - there was particularly strong sales in Brazil, Russia and other emerging economies. Group operating profit grew 35 per cent year-on-year.
But this masks weakness in Charter's other operations. Sale as Esab's smaller cutting and automation business shrank 41 per cent as clients deferred capital goods orders. Howden - Charter's other major division, which supplies huge fans to coal-fired power stations across the world - peaked last year but is now shrinking, with operating profit there down 19 per cent for the period. Chief executive Mike Foster also guided down expectations for 2011, expressing particular disappointment at project delays in the US: "Decision-makers don't have confidence that energy demand will reach the 2008 peak again soon," he notes. More promisingly, Howden grew sales by over 20 per cent in South America, South Africa and Australia, although that was helped by currency movements.
UBS expects full-year pre-tax profits of £128.8m and EPS of 56.1p (2009: £92.7/37.9p).
CHARTER INTERNATIONAL (CHTR) | ||||
|---|---|---|---|---|
| ORD PRICE: | 722p | MARKET VALUE: | £ 1,198.7m | |
| TOUCH: | 722-724p | 12-MONTH HIGH: | 856p | LOW: 515p |
| DIVIDEND YIELD: | 3.0% | PE RATIO: | 13 | |
| NET ASSET VALUE: | 335p* | NET CASH: | £14m | |
| Half-year to 30 Jun | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Net div per share (p) |
|---|---|---|---|---|
| 2009 | 846 | 39.5 | 14.6 | 7.00 |
| 2010 | 840 | 69.7 | 30.4 | 7.50 |
| % change | -1 | +76 | +108 | +7 |
Ex-div:11 Aug Payment:10 Sep *Includes intangible assets of £145m or 87p per share | ||||
